INSIGHT COMMUNICATIONS COMPANY, L.P. AND INSIGHT KENTUCKY PARTNERS, II, LP, F/K/A INTERMEDIA PARTNERS OF KENTUCKY, L.P. v. CITY OF LOUISIVLLE
Annotate this Case
Download PDF
RENDERED: JUNE 27, 2003; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2002-CA-000701-MR
INSIGHT COMMUNICATIONS
COMPANY, L.P. AND
INSIGHT KENTUCKY PARTNERS, II,
LP, F/K/A INTERMEDIA
PARTNERS OF KENTUCKY, L.P.
(INSIGHT)
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE LISABETH HUGHES ABRAMSON, JUDGE
ACTION NO. 00-CI-007100
CITY OF LOUISIVLLE
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
BAKER, GUIDUGLI AND KNOPF, JUDGES.
GUIDUGLI, JUDGE. Insight Communications Company, L.P. and
Insight Kentucky Partners, II, L.P. F/K/A Intermedia Partners of
Kentucky, L.P. (“Insight”) appeal from an opinion and order of
the Jefferson Circuit Court that dismissed its declaratory
judgment action and granted summary judgment to the City of
Louisville, Kentucky (“the City”).
We affirm.
Having reviewed the record, written briefs, oral
arguments and applicable statutory case law, we believe that the
well-written and reasoned opinion and order rendered March 21,
2002, by Jefferson Circuit Court Judge Lisabeth Hughes Abramson,
succinctly and sufficiently sets forth the facts leading to the
controversy and legal issues presented by the parties.
Accordingly, we set forth Judge Abramson’s opinion and order as
follows:
This matter is before the Court on a
Motion for Summary Judgment filed by
Defendant City of Louisville (“the City”).
Plaintiffs Insight Communications Company,
L.P. and Insight Kentucky Partners II, L.P.
f/k/a Intermedia Partners of Kentucky, L.P.
(“Insight”) brought this declaratory
judgment action seeking a determination that
the City breached its contract with Insight
because a cable television franchise which
the City awarded to Knology, Inc. was more
favorable than the cable franchise
previously granted to Insight. In addition,
Plaintiffs claim the award of the Knology
franchise violated state law regarding
advertising for franchises such as the one
awarded Knology. Having carefully
considered the pending motion, supporting
and opposing memoranda with attachments, and
applicable law, the Court grants the City’s
motion.
RELEVANT FACTS
In 1973 the City awarded the first
cable television franchise in Louisville to
-2-
River City Cable Television. In 1978 River
City changed its name to C.P.I. of
Louisville and continued to operate the
franchise. A successor to that entity,
Plaintiff Intermedia Partners of Kentucky,
L.P. (now known as Insight Kentucky Partners
II, L.P.) acquired a renewal franchise
effective May 12, 1998 and extending through
March 31, 2010 (hereafter “the Renewal
Franchise Agreement”). This Renewal
Franchise Agreement had a twelve-year term
and provide a fifteen-month deadline for
replacement of the existing all-coaxial
cable plant with a “hybrid fiber/coax” plant
using a combination of fiber optic cable and
coaxial cable. The Renewal Franchise
Agreement contained “Section 38 – Term of
Franchise and Renewal” which provides as
follows:
The term of this franchise renewal
shall be such that the franchise
expires on March 31, 2010. The
rights and privileges granted by
this ordinance to Operator are not
exclusive and nothing herein is
intended to or shall be construed
so as to prevent the City from
granting other and similar rights,
privileges and franchises to any
other person, firm, association or
corporation, provided, however,
that such rights privileges and
franchises are neither “more
favorable” nor “less favorable” if
the rights, privileges granted and
burdens imposed in the subsequent
franchise are substantially
similar to those contained in this
Franchise Ordinance.
In 1999 Insight acquired control of
Intermedia Partners of Kentucky, L.P. and as
a consequence with the City’s approval
became the franchisee.
-3-
A competitor, Knology, began
discussions with the City in February 2000
regarding the offering of a competing cable
franchise which would offer a communications
network capable of simultaneously providing
voice, video, data and other communications
services. The steps preceding the eventual
issuance of a franchise to Knology, Inc. are
accurately detailed in the City’s memorandum
as follows:
9.
On August 8, the Board reviewed
and approved publication of a
proposed Invitation For Bid (IFB)
Ordinance, Number 0-112-8-00. The
IFB Ordinance set forth the terms
and conditions under which the
City would sell a cable television
franchise to an interested bidder.
Publication occurred on August 12,
2000, through an advertisement in
the Louisville Courier-Journal
that instructed potential bidders
to submit responsive bids by 10 AM
of August 21st. On August 14th,
Insight sent the Board a letter
objecting to several terms and
conditions in the IFB Ordinance.
10.
On August 17th, by letter to the
Director of Public Works, Knology
agreed to the terms and conditions
in the IFB Ordinance. No other
bidder came forward before the
deadline of August 21st. Later on
August 21st, a committee of the
Board conducted a hearing on
Knology’s financial, technical and
legal qualifications and received
a letter from Knology’s counsel
responding to each of the major
points that Insight had raised in
its letter to the Board dated
August 14th.
11.
In an effort to resolve the
dispute over the terms and
-4-
conditions of the IFB Ordinance,
the City, Knology and Insight
participated in a mediation with
the Honorable Ben Shobe, a retired
judge of this Court. During the
mediation, Knology agreed to two
changes in the IFB Ordinance.
First, it agreed to a reduction of
the construction deadline from 5
years to 4 ½ years. Second,
Knology agreed that, over the next
five years, it would make an
annual contribution of $100,000 to
help improve the City’s
technological abilities.
Notwithstanding these concessions
by Knology, Insight refused to
waive its “level playing field”
objections to the IFB Ordinance.
12.
After the IFB Ordinance was
amended to incorporate the changes
to which Knology had agreed, the
Board of Alderman approved it on
August 29, 2000, as Ordinance
#114, Series 2000 (As Amended).
At the same time, the Board
approved Resolution #187, Series
2000, which awarded a franchise to
Knology pursuant to Ordinance 114,
Series 2000. The Mayor signed
both of these documents on
September 12, 2000.
Insight filed its Complaint for
Declaration of Rights in this Court on
November 2, 2000. Insight seeks a
declaration that the 2000 ordinance is void.
It also seeks a declaration that the Board
of Alderman’s resolution selling the cable
television franchise to Knology is void and
that the City breached the Renewal Franchise
Agreement with Insight by awarding this
second franchise (the “Knology Franchise”)
on more favorable terms. Finally, Insight
seeks a declaration that the City of
Louisville failed to comply with Kentucky
-5-
law regarding the publication of an
ordinance by changing the ordinance without
proper notice to the public.1
The City moved for summary judgment in
April 2001 and the motion was fully briefed
on June 15, 2001. However, the parties
later removed the matter from the Court’s
docket while “meaningful settlement
discussions” were underway. In October 2001
the matter was returned to the summary
judgment docket for this Court’s
consideration.
CONCLUSIONS OF LAW
Insight contends that there are four
material differences between the Insight
franchise and the Knology Franchise which
justify Insight’s invocation of the “level
playing field” provision in Section 38 of
Insight’s Renewal Franchise Agreement.
First, the Insight franchise was for twelve
years while the Knology franchise is for
fifteen years. Second, the Insight Renewal
Franchise Agreement required Insight to
complete its reconstruction project within
fifteen months while Knology was allowed
fifty-four months to build its system.
Third, Insight contends that while it was
required to perform a “simultaneous build,”
in all parts of the city Knology was
permitted to concentrate its construction in
one part of the city each year. Finally,
Insight’s Renewal Franchise Agreement had a
sixty-day notification period to cure any
default with the penalties including
potential revocation while the City’s sole
remedy against Knology for failure to meet
its construction deadlines for a period of
eighteen months was a $600 daily penalty.
To establish the materiality of these
differences, Insight tenders the affidavit
of Henry Sherman, “an expert in the cable
1
We note that on appeal Insight has abandoned this argument. Judge Abamson’s
opinion and order addresses this issue on pages 9-12, and we have included
the entire order for a more thorough understanding of the case.
-6-
industry,” who opines on the more favorable
terms granted Knology in the length of the
franchise, time for construction and
penalties for failing to comply with
construction timetables. On the
“simultaneous build” provision allegedly
applicable to Insight but not Knology,
Insight apparently does not rely on Mr.
Sherman but simply the plain language of the
agreements.
The City maintains that the
determination of whether the Knology
Franchise violates the “substantially
similar” requirement of Section 38 is one of
law to be made by this Court. Citing case
law from other jurisdictions which have
dealt with similar issues, the City contends
that an item by item comparison is not
appropriate to determine whether the
competing entities have been granted
substantially similar agreements. Thus in
United Cable Television Service Corp. v.
Department of Public Utility Control, 235
Conn. 334, 663 A. 2d 1011, 1025 (1995) the
Supreme Court of Connecticut held that a
level playing field inquiry “requires
consideration of the entire package of terms
and conditions required of both cable
providers in order adequately to determine
whether one has been favored over the
other.” Nevertheless, the City insists that
even if an item by item comparison is made,
it is clear as a matter of law that Insight
has not been subjected to terms less
favorable than those granted Knology.
Under Kentucky Rule of Civil Procedure
CR 56.03 a summary judgment:
…shall be rendered forthwith if
the pleadings, depositions,
answers to interrogatories,
stipulations, and admissions on
file, together with the
affidavits, if any, show that
there is no genuine issue as to
-7-
any material fact and that the
moving part is entitled to a
judgment as a matter of law.
A summary judgment is used “to
terminate litigation when, as a matter of
law, it appears that it would be impossible
for the respondent to produce evidence at
trial warranting a judgment in his favor and
against the movant.” Paintsville Hospital
Co. v. Rose, Ky., 683 S.W.2d 255, 256
(1985), citing Robertson v. Lampton, Ky.,
516 S.W.2d 838, 840 (1974). To prevail on a
motion for summary judgment, a movant must
convince this Court, by the evidence of
record, that there are no genuine issues of
material fact. Steelvest v. Scansteel
Service Center, Inc., Ky., 807 S.W.2d 476,
(1991); Hubble v. Johnson, Ky., 841 S.W.2d
169 1992). A party opposing a properly
supported summary judgment motion cannot
defeat that motion without presenting at
least some affirmative evidence
demonstrating that there is a genuine issue
of material fact requiring trial.
Steelvest, supra at 482. In the analysis,
“the focus should be on what is of record
rather than what might be presented at
trial.” Welch v. American Publishing Co. of
Kentucky, Ky., 3 S.W.3d 724, 730 (1999).
As the City correctly notes, the
interpretation of a contract is typically an
issue of law for the Court. Morganfield
National Bank v. Damien Elder & Sons, Ky.,
836 S.W.2d 893, 895 (1992). The proper
construction of a contract is a matter which
should not be submitted to a jury “unless it
depends upon a choice among reasonable
inferences to be drawn from extrinsic
evidence admissible apart from the
application of the parole evidence rule.”
Cook United, Inc. v. Waits, Ky., 512 S.W.2d
493, 495 (1974). Extrinsic evidence is not
considered unless the contract itself is so
ambiguous that it is necessary to resort to
extrinsic evidence to determine the parties’
-8-
intent. Thus, in Central Bank & Trust Co.
v. Kincaid, Ky., 617 S.W.2d 32, 33 (1981)
the Supreme Court stated:
First of all we need to determine
whether the terms of the
[contract] are ambiguous. If they
are, then extrinsic evidence may
be resorted to in an effort to
determine the intention of the
parties; if not, then extrinsic
evidence may not be resorted to.
The criterion in determining the
intention of the parties is not
what did the parties mean to say,
but rather the criterion is what
did the parties mean by what they
said. An ambiguous contract is
one capable of more than one
different, (sic) reasonable
interpretation.
Applying these principles to the
pending motion, it is clear that the issues
raised by Insight are properly decided on a
motion for summary judgment because there is
no ambiguity in the relevant contracts.
Insight was promised that “the rights,
privileges granted and burdens imposed in
the subsequent franchise” would be
“substantially similar” to Insight’s. As
the City correctly notes, the determination
of “substantial similarity” is a matter of
contract construction and not an issue of
fact for a jury.2
Comparing the two agreements, it is
clear that the fifteen-year term of the
Knology Franchise is substantially similar
to the twelve-year term awarded to Insight
when the “build time” is considered.
2
If Insight’s position were accepted any franchise granted on terms that were
not precisely identical to Insight’s contract terms would be subject to
evaluation by a jury. Clearly, the “substantially similar” language in
Section 38 was never intended to require a jury comparison of provisions of
competing franchises. (Footnote in original opinion and order).
-9-
Indeed, Section 39 of the Knology Franchise
states specifically:
The term of this Franchise shall
be fifteen (15) years from the
date this franchise is granted to
the Operator. The term of this
franchise reflects that the City
and Operator recognize that
Operator will likely only have a
completed Cable System for
approximately ten (10) years of
the franchise.
In this provision the City specifically
acknowledged that the construction time for
the new system would leave Knology with
approximately ten years with a fully
operational cable system. Similarly,
Insight’s twelve-year Renewal Franchise
Agreement implicitly recognizes that after a
fifteen month reconstruction of its existing
cable system, Insight would have slightly
over ten years with a fully rebuilt
operational cable system. Because both
franchises are granted essentially identical
franchise terms, i.e. ten years, Insight’s
attack on this issue must fail.
Similarly, the construction time
allowed each franchisee is not dissimilar.
While Insight is only allowed fifteen
months, as the City aptly points out, new
construction and system upgrades are
complete different tasks. Accord Cable
Systems of Southern Connecticut, Ltd. v.
Connecticut DPUC, 1996 W.L. 661818 @ pg. 4.
Obviously Insight will have an operational
cable system while the upgrade is being
completed. Knology, by contrast, will only
have a portion of its system operating until
construction is fully complete fifty-four
months after commencement.
Insight urges the Court to view this
particular provision from the standpoint of
the number of miles of construction or
-10-
rebuild per month which each franchisee will
have to accomplish or alternatively the
present value of the investment in each
franchisees’ project. This Court rejects
Insight’s apparent belief that the
“substantially similar” provision in Section
38 of the Renewal Franchise Agreement
entitles Insight to know the exact financial
burden its competitor will bear so that the
relative burdens can be matched or
distinguished. Section 38 protects Insight,
the incumbent, from a franchisee who has
received a substantially more favorable
contract; it does not guarantee Insight the
right to dissect financially its competitor
and then argue that the two competitors’
financial burden must match.
The third challenge relates to the socalled “simultaneous build” vis-à-vis
“phased construction.” The City correctly
notes that Section 45(5) of the Knology
Franchise states that:
In planning and undertaking
construction, the Operator shall
treat all areas and neighborhoods
in the City on a substantially
equal basis in order that Cable
Services will be available to
potential subscribers at
substantially the same time.
Insight has a comparable provision in
Section 44(3) of its Renewal Franchise
Agreement wherein it states:
The construction timetable is such
that both low and high income
areas will receive the benefits of
the upgrade and construction.
In this Court’s view the competitors have
similar obligations regarding service
throughout the city. Although Knology is
allowed a phased construction approach,
there is not the considerable latitude to
-11-
ignore or delay servicing portions of the
City’s residents which Insight would have
this Court believe.
Finally, Insight complains that it has
only sixty days to cure any default in
meetings its construction timetable while
the City cannot terminate the Knology
Franchise for eighteen months in the event
of a delay in meeting construction
deadlines, but must limit itself to a $600
daily penalty. Again, the differences in an
incumbent upgrading an existing system and a
new entrant constructing an entirely new
system justify some difference in the
penalty provision. Indeed in Knology’s
Franchise, Section 45(6) specifically notes
that construction deadline extensions may be
required “for good and sufficient cause
based upon events beyond the control of
Operator, including but not limited to
compliance by Louisville Gas & Electric
Company, BellSouth Telecommunications, Inc.
and Insight Communications Company, L.P. or
their successors and any other providers of
access to public right-of-way by pole
attachment or other conduit….” Insight does
not have a comparable provision presumably
because those same issues have been dealt
with for years by Insight and its
predecessors in the construction and
maintenance of its current fully operational
cable system.
There will never be an apple-to-apple
comparison for Insight and other franchisee
simply because Insight is the incumbent
which in its own right and through its
predecessors has been the exclusive provider
of cable television services in the City of
Louisville for almost thirty years. No new
cable television franchisee can ever be in
the same position as a thirty-year veteran.
Whether viewed individually or as a package,
it is clear to this Court that the terms of
the Knology Franchise are substantially
similar to those accorded Insight and,
-12-
consequently, Insight’s request for a
declaration that the City has breached the
Renewal Franchise Agreement must be denied.
The final issue raised by Insight
parties to the Invitation for Bid (IFB)
Ordinance which set forth the terms and
conditions under which the City would sell a
cable television franchise to an interested
bidder. Insight claims that the City
violated Section 164 of the Kentucky
Constitution and KRS Chapter 424 when it
improperly advertised the subject franchise.
In its summary judgment motion the City
first contends that Insight does not have
the requisite standing to raise the alleged
violation of the advertising requirement.
KRS 424.30 provides that any ordinance
which is adopted without compliance with the
publication requirements of KRS Chapter 424
is “voidable by a court of competent
jurisdiction” upon suit brought by “any
citizen of this state.” The complaint
reflects that Insight Communications and
Insight Kentucky are Delaware limited
partnerships, although Insight Kentucky has
a business office in Louisville and is
licensed to conduct business in the
Commonwealth of Kentucky. Certainly this
latter fact would qualify Insight Kentucky
as a Kentucky citizen for purposes of
federal court jurisdiction. Assuming
arguendo that Insight Kentucky is a Kentucky
citizen the City raises other challenges to
Insight’s standing.
Specifically, the City cites Health
America Corporation of Kentucky v. Humana
Health Plan, Inc., Ky., 697 S.W.2d 946
(1985) for the proposition that a
disappointed competitor has no standing to
judicially contest the award of a public
contract to another entity. However,
Insight is not in this case simply a
disappointed competitor. Insight is the
existing franchisee and thus potentially
-13-
will suffer “injury distinct from that of
the general public.” Fish v. Elliott,
Ky.App., 554 S.W.2d 94 (1977). This Court
is persuaded that the City is most likely
correct in its assertion that any standing
conferred on Insight by virtue of Section 38
of the Renewal Franchise Agreement is simply
standing to raise a breach of contract claim
and not standing to challenge compliance
with state statutes. However, whether the
type of injury Insight has is sufficient to
confer standing need not be decided because
regardless of Insight’s capacity to bring
the claim, the challenge pursuant to KRS
424.380 fails on substantive grounds.
As the City correctly notes, the IFB
Ordinance was amended as a result of
objections raised by Insight. The
amendments reduced the construction deadline
from five years to four and one-half years
and required the successful bidder to make
an annual contribution of $100,000 in each
of the first five years to help improve the
City’s technological abilities. These
amendments made the IFB Ordinance more
burdensome and therefore less attractive to
potential bidders. Under the principle
enunciated in Cumberland Telephone &
Telegraph Co. v. City of Hickman, Ky., 111
S.W. 311 (1908), a change which benefits the
City and is less favorable to the potential
franchisee need not be re-advertised. The
cases relied upon by Insight, City of
Owensboro v. Evansille & Ohio Valley Transit
Company, Ky., 448 S.W.2d 335 (1969) and City
of Princeton v. Princeton Electric Light &
Power Company, Ky., 179 S.W. 1074 (1915), do
not require a contrary result. In fact,
those cases simply stand for the general
proposition that a city cannot sell
something which is “materially different”
from what was advertised. City of
Princeton, 179 S.W. 1075. In this case the
IFB Ordinance as amended was not materially
different from the original ordinance which
was advertised.
-14-
Finally, Kentucky Constitution Section
164 is similarly unavailing for Insight on
this issue. There is certainly no basis for
concluding that the City of Louisville was
“giving away, or disposing of at inadequate
prices, the rights and privileges which
belong to its citizens” the evil sought to
be avoided by the public advertisement
requirement. E.M. Bailey Distributing
Company v. Conagra, Inc., Ky., 676 S.W.2d
770, 773 (1984).
In sum, Insight’s procedural attack on
the IFB Ordinance and resulting Knology
Franchise cannot survive the City’s Motion
for Summary Judgment. Even if Insight has
the requisite standing, the claim fails
substantively given the nature of the
amendments made to the previously advertised
IFB Ordinance. The circumstances presented
are simply not such as would warrant this
Court voiding the ordinance pursuant to KRS
424.380.
ORDER
On the Motion for Summary Judgment filed
by Defendant City of Louisville,
IT IS HEREBY ORDERED AND ADJUDGED that
the Motion for Summary Judgment should be,
and hereby is, granted.
IT IS FURRTHER ORDERED AND ADJUDGED that
the Complaint of Plaintiffs Insight
Communications Company, L.P. and Insight
Kentucky Partners II, L.P. f/k/a Intermedia
Partners of Kentucky, L.P. should be, and
hereby is, dismissed.
On appeal, Insight maintains that the circuit court
erred in granting summary judgment to the City since
determination of whether the granted franchises are
-15-
“substantially similar” is an issue of fact to be determined,
following extensive and complete discovery, by a jury.
Insight
also argues, in the alternative, that if this determination is a
matter of law, then the trial court erred in its findings,
opinions and conclusions upon which it based its order.
We
disagree.
Section 38 of Insight’s Franchise does not require the
terms of any subsequent franchise agreement to be identical,
only “substantially similar.”
As Judge Abramson’s order sets
forth, the Knology Franchise or any future franchise can never
have identical terms as Insight and its predecessors.
Insight
has a thirty (30) year history while any future franchise must
start from square one.
Thus, Section 38 requires only that the
terms granted to a new franchise cannot be “more favorable” or
“less favorable.”
The review of the terms is not to be
considered by comparing “apples to apples” but rather by
reviewing the entire franchise agreement to see if the rights
and privileges as well as the burdens imposed are substantially
similar.
are.
We agree with the circuit court’s review that they
We do not believe the trial judge erred in her review of
the terms or in her findings which form the basis of her opinion
and order.
We further agree that summary judgment was appropriate
in that there was no genuine issue of material fact and that the
-16-
City was entitled to judgment as a matter of law.
agreements were not ambiguous.
The franchise
The terms and conditions were
meticulously negotiated and set forth by experienced and skilled
lawyers.
As the trial court noted, “the interpretation of a
contract is typically an issue of law for the Court.
Morganfield National Bank v. Domien Elder & Sons, Ky., 836
S.W.2d 893, 895 (1992).”
There are no genuine issues of fact.
While the parties agreed that the terms of the franchise
agreements were not identical, they did agree on the four areas
which Insight contends Knology received more favorable terms:
(1) Length of franchise – 15 years vs. 12 years; (2)
Construction time – 4 ½ years vs. 18 months; (3) Penalty
provision – 60 days to remedy default vs. 18 months with a $600
daily penalty, and; (4) “cherry-picking” – Insight must develop
all areas at same time vs. Knology must develop all areas by end
of construction date.
There was no dispute that these four
terms formed the basis for Insight’s complaint of unfavorable
treatment.
Insight argues that it needed more discovery to
expose these differences and that a jury must be given the
opportunity to interpret the factual evidence.
The facts were
not in dispute, just the application of those facts to the
unambiguous contracts entered by the parties hereto.
-17-
In that we believe the circuit court properly applied
the law to the undisputed facts before it and in that we believe
the circuit court committed no error in its findings, we affirm.
For the foregoing reasons, the circuit court’s opinion
and order granting the City summary judgment and dismissing
Insight’s complaint for declaration of rights is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
Laurence Zielke
James David Ballinger
Janice M. Theriot
Louisville, KY
James Baller
E. Casey Lide
Washington, D.C.
ORAL ARGUMENT FOR
APPELLANTS:
William C. Stone
Director of Law
Louisville, KY
Laurence Zielke
Louisville, KY
Lisa A. Schweickart
Louisville, KY
ORAL ARGUMENT FOR APPELLEE:
James Baller
Washington, D.C.
-18-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.